Credit Archives | Page 50 of 80

Oct

2022

How Credit Card Frauds Are Investigated and Caught

Even if you’ve never been a victim of credit card fraud yourself, you probably know someone who has — and you may have wondered how credit card frauds are caught. Credit card companies and merchants frequently update the security measures they use to prevent credit card fraud, and their investigators will check into issues as they occur. Law enforcement also may get involved, depending on the type of fraud and the amount.

That being said, it’s still important for you to protect yourself against credit card fraud. Read on to learn about the different types of credit card fraud you might encounter, what to do if you suspect your account has been compromised, and steps to take to safeguard your account going forward.

What Is Credit Card Fraud?

Credit card fraud is the unauthorized use of a person’s credit card information to purchase goods and services or get cash from an account. According to data the Federal Trade Commission (FTC) has collected over the past four years, credit card fraud is the most reported form of identity theft.

Luckily, federal law can limit your responsibility if you move quickly to report a lost or stolen card or dispute unauthorized charges. Still, it can be a real hassle to clear up the mess and keep inaccurate information caused by identity theft off your credit reports.

What Types of Credit Card Fraud Are There?

You can become a victim of credit card fraud whether someone physically takes your card, virtually hacks into your account, or uses your information to create a new account. Here’s how fraudsters can obtain and use your account information through various credit card scams.

Card-Present Fraud

EMV® chips, PINs, and other security measures have made “card-present” fraud less of a factor than it used to be. But there are still some criminals who are willing to risk using a lost, stolen, or counterfeit card to make an in-person purchase — and they’ll likely move quickly to do so.

Even if you think you’ve simply misplaced a card, you may want to use your card’s “on/off” feature, if there’s one available, to temporarily suspend the card until you can locate it or report that it’s missing.

Card-Not-Present Fraud

Even if your cards are safely tucked away in your wallet, you may find unauthorized charges on your statement. These days, it’s far more common for a thief to work behind the scenes to get your account information and use it to commit fraud online or over the phone.

Card Skimming

You’ve probably seen warnings in the news about thieves placing skimming devices on gas pumps, but credit card skimmers can be used to steal information just about anywhere there’s a card-reading device. This can include on ATMs and at stores and restaurants.

When you swipe a card, the skimmer reads the magnetic strip and stores the credit card number, expiration date, and cardholder’s name. There are also devices (cameras or false keypads) that can record a PIN number.

The captured information can then be used to make fraudulent charges online or over the phone. The hacker could also sell the collected data or use it to create counterfeit cards.

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False Application Fraud

If identity thieves can get access to your personal information (through a data breach or some other method), they might be able to use it to apply for a new credit card, loan, or line of credit in your name. Or, they might blend information from several victims to create a false identity.

“Card Never Arrived” Fraud

This type of fraud can happen when someone intercepts a new or replacement card before you receive it in the mail. If a new card doesn’t come when you think it should have arrived, you may want to check with your credit card issuer to make sure it hasn’t been taken.

Phishing

Sometimes identity thieves will try to get the personal information they need using a phishing email, text, or phone call that appears like it’s from a bank or some other familiar contact or business. The message might ask you to click on a link or go to a website where you’ll be asked for your password, the CVV number on your credit card, or other details that may be used to access your accounts.

Hacking

Your personal details also could be at risk if your bank, credit card company, or some other business that stores your info is involved in a data breach. If this were to happen, a hacker could get ahold of your credit card information.

Account Takeover

Once a person’s identifying information is stolen (through a data breach, phishing, or another method), a thief may contact credit card companies directly. They could impersonate the cardholder and change their PINs and passwords to take over the account.

How Are Credit Card Frauds Typically Caught?

Early detection is critical when it comes to catching credit card fraud and minimizing the damage thieves can do. Unfortunately, unless you notice your card is lost or stolen, or you see unusual activity on your account statement, you and your credit card company might not know someone is making unauthorized charges for days or even weeks.

How Often Do Credit Card Frauds Get Caught?

It’s difficult to say how often credit card frauds get caught. A heads-up clerk might notice someone using a stolen credit card and call it in to the police. Or, an investigator might be able to trace a criminal who uses a stolen credit card number online. But unless you know the person involved in committing the fraud, you may not find out if there’s actually been an arrest.

The good news for credit card fraud victims is that if you quickly report the fraudulent use of your account, you won’t be held responsible for the charges. The Fair Credit Billing Act protects credit card users from being held liable for more than $50 in the event of fraud. Even better, major card networks have their own “zero liability” policies to ensure you won’t pay for unauthorized charges made with your credit card or account information.

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How Do Credit Card Companies Investigate Fraud?

The best way to start an investigation into fraudulent transactions on your credit card is to notify the credit card issuer, either by phone or online chat. The card issuer will likely deactivate your card and send you a replacement. It also may refund your money at this point, or it may want to wait until the case is investigated.

The issuer then has 30 days to respond to your report and begin its investigation. The investigation can take up to 90 days to be completed.

As for how credit card companies investigate fraud, the issuer’s internal investigation team will begin by gathering evidence about any disputed transactions. It may check for things like transaction timestamps, the IP address of the person who made the disputed purchase, and the purchaser’s geographic location. If the crime appears to be part of a larger pattern or organization, the card issuer might alert the FBI or other law enforcement officials.

You may be able to help the investigation if you also report the crime to local law enforcement — especially if you believe the theft was committed by someone you know, or by someone local who stole personal information from your computer or mailbox. The FTC’s identity theft website can take you through the steps of filing an identity theft report.

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What Should You Do If You Suspect Credit Card Fraud?

Besides reporting credit card fraud as soon as you suspect there’s an issue, there are other steps you can take to further safeguard your finances.

Send a Follow-Up Letter

The FTC recommends following up immediately with a letter to the card issuer that confirms you reported unauthorized activity on your account. You should note the date and time you reported the loss, and include any relevant documents (such as your police report and/or your report to the FTC).

Send the letter to the credit card company’s address for billing inquiries (not the address where you make payments). Consider sending it by certified mail so you have a receipt.

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Change Your Passwords

It’s a good idea to change your password occasionally anyway. But if you suspect you’ve been the victim of identity theft, you may want to review all of your accounts and change your passwords and PINs.

Contact the Credit Bureaus

You also should contact the three major credit bureaus to report your problem, and you may want to request a credit freeze, credit lock, and/or fraud alert. What’s the difference?

• A credit freeze, also known as a security freeze, limits access to your credit report without your permission. This can make it harder for an identity thief to open a new credit account or loan in your name. A credit freeze is free, but you must request a separate freeze from each credit bureau. And when you want to unfreeze your file, you must do that separately as well, usually by using a PIN or password provided by each credit bureau.

• A credit lock is pretty much the same thing as a credit freeze, but it may be more convenient. Once you set it up, you can lock and unlock your credit reports using an app or secure website. Plus, you don’t have to keep track of a PIN or password to change your status.

• A fraud alert doesn’t put an all-out block on your credit report the way a freeze or lock can, but it still can be a useful tool. It puts a notice on your credit reports that cautions creditors that you may be a fraud victim. Additionally, it encourages them to take extra steps to verify your identity before opening a new account or changing something on a current account. Fraud alerts are free, and once you place a fraud alert with one of the credit bureaus, it will send a request to the other two bureaus to set up alerts on their reports.

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Watch Your Credit Card and Banking Statements

Don’t assume you’re out of the woods because you haven’t seen any unauthorized charges for a while. It may take weeks or even months before charges show up on your accounts if you’re the victim of identity theft. Checking your bank account, credit card, and other statements regularly for unusual charges (and to track your own spending) is a healthy financial habit to develop.

Track Your Credit Reports and Credit Score

It also can be helpful to track your credit reports to make sure the unauthorized charges you reported were blocked or removed, and that nothing new has turned up. Lenders, credit card issuers, and others use these reports to determine your creditworthiness, so you’ll want them to accurately reflect your finances.

You also can check your credit score to be sure it’s where it should be. Consumers can get a free credit report once a year from each of the three credit bureaus, and many financial institutions and credit card companies provide free credit scores to their customers. Even if you’re not a victim of identity theft, this can be a good credit card rule to follow.

Protecting Yourself From Credit Card Fraud

Unfortunately, identity theft and fraud can happen to even the most vigilant credit cardholders. To improve your chances of spotting and tracking unusual transactions, you may want to:

• Set up transaction alerts: If your credit card issuer offers fraud notifications, it could help you react more quickly to unauthorized charges on your account. You may be able to set up alerts for specific transaction types, amounts, or locations. If an alert is triggered, you’ll be notified (usually by text, push notification, or email), so you can let the card issuer know as soon as possible if there’s a problem.

• Track charges online or with an app: The days of waiting for your monthly credit card statement to arrive in the mail are long gone. You can check your current credit card balance and other details any time you like, by logging into your account regularly (at least once a week) or using a mobile app.

• Sign up for credit monitoring: A credit monitoring program is another way to find out quickly (generally within 24 hours or less) if there’s been some type of unusual activity on an account. The service can notify you of major changes to your credit report, including large purchases or inquiries from lenders or credit card companies. If you didn’t make any big purchases or apply for a new credit card or loan, you can quickly take steps to inform your card issuer and the credit bureaus.

The Takeaway

Detecting and reporting credit card fraud as soon as possible is critical if you hope to limit the stress and cost of clearing it up. Even though issuers are on top of credit card fraud investigation, It’s also important to take steps to proactively protect your accounts.

Carefully choosing which credit cards you use is one way you can help safeguard yourself. The SoFi Credit Card, for example, offers chip technology, ID theft protection, and other security features. It also can make monitoring all your accounts easier, because you can manage your credit card, loans, banking, and investing all in one place on SoFi’s app or website.

Check out how the SoFi Credit Card can help protect your financial future.

FAQ

Can you trace credit card fraud?

Yes. If you notice suspicious activity on your credit card account, you can notify your credit card issuer immediately. The card issuer will then take steps to investigate any fraudulent transactions. You also should contact the three major credit card bureaus, and you may want to make a police report.

How long does it take to investigate a credit card fraud?

The card issuer must send a letter confirming it received your fraud report within 30 days. It then has 90 days to complete its investigation.

What evidence can a card issuer use to investigate a credit card fraud?

The card issuer will use any information you provide in the course of its investigation. It also may gather further evidence by talking to the merchant who was involved, looking at transaction timestamps, or checking the IP address of the device used to make an online transaction.

What fraud protection measures do credit card issuers provide?

Credit card issuers have developed several features to stop criminals from committing fraud. Those measures range from chip technology and PIN and password protections, to real-time risk assessments that allow merchants to decide whether to approve or deny a transaction.

Photo credit: iStock/Galetos

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Oct

2022

Guide to Credit Card Foreign Transaction Fees

If you’ve used your credit card outside of the U.S. — or simply made a purchase online through a merchant that wasn’t U.S.-based — you may have noticed an extra cost get added onto your purchase. Called a foreign transaction fee, these costs can add up quickly.

Luckily, it is possible to steer clear of credit card fees for international transactions. Let’s take a closer look at what a foreign transaction fee on a credit card is, how much they typically run, and how you can avoid them.

What Is a Credit Card Foreign Transaction Fee?

A credit card foreign transaction fee is a surcharge, or an additional charge, that some credit cards add to transactions that are processed outside of the U.S. Said another way, it’s a cost that applies for credit card processing when certain conditions are met.

Credit card foreign transaction fees may apply when you make an online purchase from a merchant that’s located outside of the U.S. Additionally, they may apply when you’re using a credit card in another country.

While broadly referred to as a foreign transaction fee, this fee is actually comprised of two different charges. One part comes from the credit card issuers and the other is from the credit card network (think Visa or Mastercard, for example).

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How Are Credit Card Foreign Transaction Fees Calculated?

To find out how international credit card fees are calculated for your particular credit card, check your card’s terms and conditions. You’ll likely find information on foreign transaction fees in a section titled “Rates and Fees” or “Pricing and Terms.”

In general, however, the amount of your credit card’s international fees is calculated based on a set percentage of the transaction amount.

For example, let’s say your credit card charges a 3% foreign transaction fee, and you’re paying about $50 for souvenirs you bought at a merchant abroad. In this instance, the credit card network may take 1% of the transaction, while the credit card issuer would deduct 1%. That would result in a total foreign transaction fee of $1.50 for that particular purchase.

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How Much Do Credit Card Foreign Transaction Fees Cost?

Some cards don’t come with credit card international fees, meaning you don’t have to worry about this credit card cost. For cards that do charge foreign transaction fees, this fee can range from 1% to 4% per transaction, with 3% being the average rate.

When this credit card fee for international transactions is charged once, it may not seem like a big deal. But if you make a lot of overseas purchases, it can really add up. If you have a 3% foreign fee credit card, for example, that will tack on $3 for every $100 you put on the card.

Foreign Transaction Fees vs Currency Conversion Fees

A foreign transaction fee isn’t the same thing as a currency conversion fee. Rather, a currency conversion fee is generally one portion of the overall foreign transaction fee you may be charged.

A currency conversion fee is the cost charged by the credit card network to cover the cost of converting funds into the currency of the merchant. So, if you were making a purchase in Spain, the currency would get converted from U.S. dollars to the Euro.

Visa and Mastercard charge a 1% currency conversion fee to card issuers. It’s up to the card issuer whether to pass along that fee to the cardholder as part of the overall foreign transaction fee charged — an example of how credit card companies make money.

Spotting Credit Card Foreign Transaction Fees

Aside from looking at the terms and conditions you were provided when you received your credit card, you can look at your card issuer’s website to learn more about any foreign transaction fees. Information is typically listed in the “fees” section. You also could use the search function on that webpage to find any mentions of foreign transaction fees.

Another option is to look at your credit card statement, as issuers must list fees separately on your monthly bill. By reviewing this section of your statement, you’ll see what you’re actually being charged for purchases you’ve made that trigger this fee. Besides, routinely reviewing your credit card statement is a good credit card rule to follow anyways, as it can help you track your spending and notice any potentially fraudulent activity.

When Are Credit Card Foreign Transaction Fees Charged?

Just like every credit card doesn’t charge a credit card annual fee, not all credit cards charge a foreign transaction fee. If yours does, then the credit card issuer will charge them when you’re using your card for purchases made outside of the U.S. This can include when you’re traveling in a foreign country and buying goods and services, or if you shop online with a merchant located abroad.

Tips for Avoiding Credit Card Foreign Transaction Fees

Hoping to steer clear of a foreign fee on credit cards? Here are some ways you may be able to do so.

Find a Card With No Foreign Transaction Fees

The most straightforward way to avoid foreign transaction fees is to simply choose a credit card that doesn’t charge them. Some travel reward cards, for example, list zero foreign transaction fees as a benefit for card holders.

This isn’t limited to travel reward cards, however, and it doesn’t apply to all of them. In other words, you’ll want to make sure to shop around before committing to a card.

Consider an International Credit Card

If you’re a frequent traveler or have a big trip coming up, you may decide to get an international credit card. This will allow you to make purchases and use ATMs in many (but not all) countries around the world. An international credit card also can be helpful if you don’t want to convert U.S. dollars to that country’s currency or use traveler’s checks for your expenditures.

However, some international credit cards do have foreign transaction fees, so check carefully before signing up for one.

Exchange Your Money Before Traveling

You can also avoid foreign transaction fees by exchanging U.S. currency into the native currency for the place(s) you plan to travel. Then, you can simply pay cash for purchases.

Most major banks in the United States will exchange U.S. dollars for the appropriate foreign currency before you travel. They may not have less commonly used currencies available though, so double check before you head to the bank.

You may be able to directly exchange cash at a local bank, or you may need to place an order with a bank online or over the phone. Exchanges may occur the same day, or they may take a couple of days to complete.

If you run out of time, airports will likely have currency exchange services available, either in-person or through a kiosk. Although convenient, the exchange rates are usually less favorable to you than what your bank can offer.

Open a Bank Account With No Foreign Transaction Fees

Another possibility is to open a bank account that allows you to use ATMs without foreign transaction fees or out-of-network fees. Or, you might check to see if your local bank already offers this feature. Some banks have partnerships with banks abroad that can allow you to withdraw funds without paying fees, while others simply reimburse any incurred costs.

Before taking out too much cash, however, keep in mind the potential safety risks of carrying around a large amount of money.

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The Takeaway

Once you know what a foreign transaction fee on a credit card is, you can figure out how to avoid them. At its simplest, a foreign transaction fee is an expense charged by many credit card companies when transactions are made with a merchant outside of the U.S. Not all credit cards charge this fee, so it can make sense to shop around for one that doesn’t if you know you’ll be making these kinds of purchases.

FAQ

Are credit card foreign transaction fees tax-deductible?

In general, businesses (but not individuals) can deduct credit card fees as long as the business can demonstrate that the card was used for business expenses. Check with your accountant for any specific questions.

Do foreign transaction fees apply to online purchases?

Yes. If you’re using a credit card that charges foreign transaction fees, then those fees will apply to online purchases if the merchant is not located in the United States.

Do all credit cards have foreign transaction fees?

No, they don’t. A number of travel cards don’t charge foreign transaction fees, though they’re not necessarily the only type of credit card that doesn’t levy this fee.

Are foreign transaction fees affected by exchange rates?

Typically, foreign transaction fees are based on a predetermined percentage of each transaction. That percentage doesn’t fluctuate when the exchange rate changes.

Photo credit: iStock/Vera Shestak

Oct

2022

Guide to Credit Card Cell Phone Protection

By Sarah Li Cain | Credit, credit card, Family Finances | Comments Off

Owning a cell phone can get expensive, especially if you have to replace or fix a stolen or damaged one. Luckily, you may have cell phone protection from your credit card.

By taking advantage of credit cards with cell phone protection, you could save on a separate cell phone insurance plan. But before signing up for a new credit card or foregoing insurance, it’s best to understand exactly what is and isn’t covered under credit card phone insurance.

What Is Credit Card Cell Phone Protection?

Credit card cell phone protection is a type of insurance protection, where your credit card issuer pays for you to replace a stolen cell phone or make repairs to a damaged one. In most cases, you’ll need to pay for your cell phone bill with that card in order to get the protection.

Depending on the terms and conditions listed on your credit card, you’ll be protected from certain types of damage, and up to a certain coverage amount.

How Does Credit Card Cell Phone Protection Work?

When you pay for your cell phone bill with a credit card that offers cell phone protection, you can file a claim if you experienced a type of covered loss.

Keep in mind that the coverage provided by your cell phone may not be primary. This means you may need to exhaust your other options, such as by filing a claim with your home, car, or separate cell phone insurance first. It’s best to check the terms of your credit card phone insurance to see when you’re able to file a claim.

If you are able to file a claim with the credit card issuer, you may need to pay a deductible per claim (in many cases it’s around $25 or $50) before insurance kicks in. Plus, you may have limitations as to how many claims you can make per year, as well as the amount you’ll be covered for. The specifics will ultimately depend on how your credit card works.

Who Does Credit Card Cell Phone Protection Cover?

In most cases, your credit card issuer will provide protection for cell phones that you pay your monthly service bills for. As in, any phone numbers listed on the monthly bill that you pay for using an eligible credit card will most likely be covered. That means if you have more than one phone on your plan, the credit card protection will extend to all of them.

However, some credit card companies may limit the number of cell phones that are covered. It bears repeating that it’s important to check the coverage limitations listed in the terms and conditions for your credit card.

What Does Credit Card Cell Phone Protection Cover?

Typically, credit card cell phone protection will pay to replace an eligible phone that’s stolen or to make repairs to an eligible phone that’s damaged. What’s typically covered includes damage to your phone that makes it non-functional or not operate optimally. Different credit card companies will have various definitions for covered damages, which can range from cracked screens to hardware failures.

What Isn’t Covered by Credit Card Cell Phone Protection?

Remember, cell phone protection only provides coverage for the actual phone. Here’s what usually is not covered by your eligible credit card:

• Accessories like a phone case or screen protector

• Cell phones for purchased for resale, or commercial or professional use

• Cell phones that are lost or that disappeared under mysterious circumstances (i.e. there wasn’t evidence of any wrongdoing)

• Phones stolen from a common carrier (like the U.S. Postal Service or another delivery service) or your baggage

• Phones from pay-as-you-go plans

• Cosmetic damage

• Damage or theft from fraud, illegal activities, normal wear and tear, certain natural disasters, and intentional acts

• Taxes or fees such as delivery charges

• Losses that are covered under your cell phone manufacturer warranty

• Replacement of a phone that wasn’t purchased from a cell phone retail store with the ability to activate phone with your cell phone service provider

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Factors to Consider Before Getting a Cell Phone Insurance Policy With Your Issuer

Trying to decide whether to take advantage of cell phone insurance through a credit card? Here are some considerations to make before deciding.

The Deductible

Though the deductible may not cost you a lot, it’s important to check exactly how much you’ll have to pay out of pocket before your insurance will cover the rest. It’s also smart to check how much it will cost for the repair beforehand, especially if you believe the cost could be close to the amount of your deductible.

The Number of Claims You Can File

Some credit card issuers limit the amount of claims you can make. For instance, you may only be able to make two separate claims a year up to the coverage limit.

You’ll also want to check to see whether the allowable coverage amount would be enough to replace your current phone if it’s stolen. If not, you may want to consider other alternatives.

Your Card’s Annual Fee

If you’re signing up for a credit card solely for the cell phone protection feature, make sure the annual fee is worth it, assuming there is one. In some cases, it may be better money-wise to stick with your homeowners or renters insurance, or to purchase a separate cell phone insurance plan.

At the end of the day, you don’t want the costs to outweigh the benefits of a credit card.

How to Know If Your Credit Card Has Cell Phone Protection

The best way to find out if your credit card offers cell phone protection is to check your card agreement. It should detail what features are offered — and you could even learn about additional perks, such as credit card rental insurance or credit card travel insurance.

Granted, the fine print can sometimes feel overwhelming or difficult to wade through. Another option is to call your credit card company and ask whether your card has cell phone protection and if so, how you can qualify.

Filing a Cell Phone Protection Claim

If you need to file a claim, most credit card issuers require that you file a report within a certain amount of time, such as within 90 days of your loss. Contact your credit card issuer, and it will provide the next steps you’ll need to take.

Your issuer may direct you to forms you’ll need to fill out with information like details around the loss and any proof you can provide. Your credit card company will then keep you informed with any updates related to your claim.

Alternatives to Credit Card Cell Phone Protection

If you aren’t using a credit card to pay your cell phone bill or just aren’t sure whether credit card cell phone protection is the right choice for you, there are other options. You might consider these alternatives:

• Homeowners or renters insurance: Many homeowners or renters insurance policies offer coverage for personal belongings. However, it typically covers theft and not damage or loss. Plus, you may face a higher deductible compared to what a credit card company may charge.

• Purchase a separate cell phone protection policy: Your phone’s manufacturer or service provider may offer policies. Before signing on the dotted line, read the fine print carefully to see what the coverage limit and deductible are, as well as what losses are included.

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The Takeaway

Getting cell phone coverage from a credit card can be a great way to protect an item you use often. Plus, it could save you from purchasing a separate policy. Before moving forward with credit card cell phone protection, check to see whether the credit card is worth signing up for.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

Can a cell phone be used to steal credit card details?

For the most part, the digital wallets used to store credit card information on your cell phone are safe. Still, you’ll want to do your research to ensure you’re choosing an app that has in place adequate protections. Also follow basic safety practices, like locking your phone, avoiding using digital payment devices over unsecured WiFi networks, and regularly reviewing your account for any fraudulent activity.

Is it safe to put your credit card details on your phone?

Generally yes, it’s safe to put your credit card details on your phone if you’re using e-wallet apps, such as Apple Pay and Samsung Pay. However, any type of credit card transaction can be vulnerable to fraud.

Is credit card cell phone protection worth it?

Credit card cell phone protection can be worth it if you want to guard against loss or theft for your phone that may cost you a lot of money to replace. You’ll want to weigh the card’s annual fee against the protection offered in order to determine if it’s truly worthwhile.

Photo credit: iStock/nunawwoofy

Oct

2022

Is It Illegal To Check Someone Else’s Credit Report?

By Kelly Boyer Sagert | Credit, relay | Comments Off

Yes, in most cases it’s illegal to check someone else’s credit report. The Fair Credit Reporting Act (FCRA) is a federal statute that defines and limits who can receive credit-related information. The act lists legal reasons why someone’s credit can be checked; therefore, it is illegal for an individual or organization to check someone’s credit report for any other purpose.

We’ll do a deep dive into when it’s OK to run a credit check on someone, and what to do if you suspect someone has pulled your credit report without permission.

Can Anyone Check Your Credit?

The short answer is no. Legally speaking, a person or organization can check your credit only under certain circumstances. Someone either needs to have what’s called “permissible purpose” or have your permission and cooperation in the process for the credit check to be considered legal.

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Who Can Access Your Credit Report?

People and organizations that can legally access your credit report under certain circumstances include the following:

• Banks and other lenders

• Utility companies

• Insurance companies

• Landlords

• Employers

• Here’s more about each

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Banks and Other Lenders

A financial institute can check someone’s credit in connection with credit-related transactions, such as when they apply for a mortgage or car loan. Note that section 609(g) of the FCRA requires financial institutions that arrange mortgage loans and use credit scores in their decision making to provide the credit score and additional information to the applicant.

Utility Companies

Although it may not be commonly thought of in this way, applying for utility service is a form of credit. So when someone requests service from an electric company, the utility will likely check the person’s credit history. If the individual doesn’t have at least a fair credit score, the company can request a deposit or even deny service.

Insurance Companies

Insurance companies have permission to review an applicant’s credit information. Note that companies must also comply with state laws as they use the credit data to underwrite policies.

Landlords

The Federal Trade Commission notes that landlords have the right to review consumer credit reports when someone applies to rent from them or renews a lease. A landlord must certify to the credit bureau (such as Equifax, Experian, or TransUnion) that they will only use this information for rental purposes.

Employers

A potential employer can check an applicant’s credit report, although the company must give the applicant notice of their intent and get written permission. State laws vary regarding an employer’s ability to use this information as part of a hiring decision.

When Is It Legal To Run a Credit Report on Someone?

There are a handful of legal reasons to run a credit report on someone.

Permissible Purpose

This umbrella term used in the FCRA describes when a credit reporting agency can provide a credit report.

Proxy Ordering

“Proxy” is a legal term for someone with the authority to represent someone else. The only instance that isn’t proxy ordering is when a consumer requests their own credit report.

To pull your report, a proxy will need to get answers to questions that only you should know — information that comes directly from your credit report. This provides an extra layer of protection to ensure that your permission is freely being given.

Deceased Spouse

An individual can send a letter to a credit agency requesting the credit report of a deceased spouse. The surviving spouse will need to provide information about both parties so that the agency can verify identities and ensure that it’s OK to provide the credit report.

During Mortgage Underwriting

The FCRA notes that a financial institution can obtain a credit report for “extending, reviewing, and collecting credit.” This applies to mortgage underwriting as well as other types of loans.

Screening Job Applicants

With permission, an employer can request and review a credit report for the purpose of “evaluating a consumer for employment, promotion, reassignment or retention as an employee.”

During Insurance Underwriting

An insurance company can check a person’s credit report, with permission, as part of the underwriting process for a policy. The FCRA delves into specifics for different types of insurance: life, health, homeowners, etc.

Recommended: Does Net Worth Include Home Equity

Evaluating Prospective Tenants

The FCRA states that a potential landlord can pull a credit report with the prospective tenant’s permission.

Court-Appointed Guardians

Court-appointed guardians can request a copy of their ward’s credit report by mail. They must provide information about themselves as well as the ward.

What To Do if Someone Pulls Your Credit Without Permission

Contact the organization that pulled your credit to rule out that it was done in error. Then contact the three credit bureaus and request that any hard credit inquiries be deleted from your credit report.

You can also submit a complaint to the Consumer Financial Protection Bureau (visit https://www.consumerfinance.gov/complaint/) and ask for any problems associated with the inquiry to be resolved.

Who Can Check Your Credit Without Permission?

Government agencies may check your credit report to process an application for a license, to determine if you qualify for public assistance, or to calculate what a person can pay in child support, among other reasons.

If you already receive credit from a company, it may periodically check your credit report. Language giving them permission is likely in their terms and conditions. Debt collectors may also get access to information on credit reports.

How To Know if Your Credit Was Checked

All hard inquiries will appear on your credit report for two years, so you can find the information there. Soft checks may or may not appear. Each year, you can get a free copy of your credit report — and find out your credit score for free — via AnnualCreditReport.com.

If you’re concerned about credit checks, consider signing up for a credit monitoring service. What qualifies as credit monitoring varies from service to service; look for one that sends out alerts for new hard inquiries.

Recommended: What Is a Tri-Merge Credit Report?

How a Credit Check Affects Your Credit Score

A soft inquiry will not hurt your credit score even if it appears on your report. A hard inquiry can lower the score by up to five points. Although the inquiry will remain on your credit report for two years, it will stop affecting your credit score after 12 months. Applying for several credit accounts in a relatively short amount of time may pose a greater risk. (Find out more about what affects your credit score.)

Can You Stop Someone From Getting Your Credit Report?

You can freeze your credit at all three bureaus, which will prevent them from sharing information with businesses that make inquiries. However, if you want to apply for a loan or otherwise conduct a transaction that requires a credit check, you will need to unfreeze your credit.

The Takeaway

The Fair Credit Reporting Act (FCRA) provides legal guidelines on who can and can’t check consumer credit reports. Certain individuals can check your credit with your permission, including landlords and employers. Banks, insurers, lenders, and utility companies may also pull a credit report if you’ve applied for credit or service with them. In some circumstances, government agencies may request your credit report without your permission. In general, an average citizen cannot check someone else’s credit report unless they are serving as a legal proxy.

SoFi’s money tracker app makes it easy to manage your money. Benefit from spending breakdowns, free credit monitoring, financial insights, and much more — all in one place.

Know where you stand, what you spend, and how to hit financial goals.

FAQ

Can I sue for an unauthorized credit check?

Consult an attorney to discuss potential legal remedies. If you discover that your credit was run inappropriately without your permission, contact all three credit bureaus to ask them to remove the inquiry so that it doesn’t harm your credit score. You can also file a complaint with the Consumer Financial Protection Bureau at https://www.consumerfinance.gov/complaint/

What is a violation of the Fair Credit Reporting Act?

There are multiple types of FCRA violations. They include instances when a credit bureau provides your information to someone who is not authorized to receive it, didn’t demonstrate a valid need for the data, or didn’t get your written permission in advance.

How do I find out who ran my credit?

You can get a free copy of your credit report from each of the three bureaus annually at AnnualCreditReport.com. Your credit report lists all hard credit inquiries from the past two years, and potentially some soft inquiries.

Photo credit: iStock/vitapix

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Sep

2022

Getting a $3,000 Personal Loan

By Caroline Banton | Credit, Financial Independence, personal_loan | Comments Off

The funds from a personal loan can be used for anything, from paying off high-interest credit card debt to buying a new spinning bike. But how hard is it to qualify for a $3000 personal loan? And what if you have bad credit?

Online lenders tend to cater more to borrowers with bad credit. They will also charge higher interest rates and financing fees because a borrower with bad credit is considered higher risk.

Read on to find out how to get a personal loan, what credit score you need for a personal loan, and where to go to get a loan if you have bad credit.

Can I Get a $3,000 Personal Loan with Bad Credit?

A personal loan is money borrowed from a bank, credit union, or online lender. Loan amounts range from $1,000 to $50,000, and the principal is paid back with interest in fixed monthly payments, typically over two to seven years. Personal loans are flexible, meaning they can be used for any purpose, from a cross-country move to home improvements.

Getting approved for a personal loanthat is $3,000 with bad credit may mean you have to jump through a few hoops to qualify. What is bad credit? According to FICO, someone with a score of 580 or below is considered a credit risk.

When calculating an individual’s credit score, FICO and other rating agencies will look at whether you pay bills on time, how long you have held credit lines or loans, your debt profile, how often you use credit, how often lenders have pulled your credit report, and your history of bankruptcy or foreclosure.

A low credit score indicates that you could be at a higher risk of defaulting on a loan. To compensate for that risk, a lender may charge you a higher interest rate for a loan or credit card, or you may have to put down a deposit.

What Is the Typical Credit Score Required for a $3,000 Personal Loan?

Since $3,000 is not a large loan amount, a credit score between 610 and 640 should suffice for an “unsecured” personal loan (a loan with no collateral). The higher your credit score, the less interest you will pay.

Benefits of a $3,000 Personal Loan

The benefits of a $3,000 personal loan include flexibility and predictability. The loan can be used for anything you need, and the payments will be the same each month until the loan is paid off.

Interest Rates and Flexible Terms

The interest rate for a personal loan will be fixed for the term of the loan, and the repayment terms are flexible, ranging between one and 10 years. Personal loans typically have a lower interest rate than a credit card, and the rates are even better if you have excellent credit. You might also be able to borrow more using a personal loan versus a credit card.

No Collateral Required

An unsecured personal loan does not require any collateral. Some loans require the borrower to use their car or home as an asset to guarantee the loan. The interest rate may be a little higher for an unsecured loan than it would be for a secured loan because the lender assumes more risk, but you won’t risk your car or home if you default.

Recommended: Secured vs. Unsecured Personal Loans

Fixed Monthly Payments

A personal loan will have fixed monthly payments for the life of the loan, which makes budgeting for bills easier.

Cons of a $3,000 Personal Loan

A personal loan might not be the best option depending on your situation and the loan’s purpose. Here are some of the downsides to a personal loan.

Debt Accumulation

Many people use personal loans to pay off credit card debt because the interest paid on a credit card is generally more than the interest paid on a loan. However, this can be a double-edged sword if they end up with a higher credit limit and the ability to rack up even more debt.

Origination Fees and Penalties

Personal loans may come with significant fees and penalties that can drive up the cost of borrowing. An origination fee of up to 6% of the loan amount is not uncommon. If you decide to pay off the balance before the term ends, you may have to pay a penalty.

Interest Rates May Be Higher Than Other Options

This is particularly true for people who have a low credit score. In that case, a credit card might charge a lower rate than a personal loan.

If you have equity in your home, another option is a home equity line of credit (HELOC). Alternatively, a credit card balance transfer might charge a lower interest rate.

Where Can I Get a $3,000 Personal Loan?

You can get a personal loan from online lenders, commercial banks, and credit unions. Online lenders are super-convenient and fast. Loans are often funded within two days. You can also get pre-qualified and see your loan terms before you apply. An online lender might do a soft credit check before you accept the loan, but your credit rating will not be affected.

Credit unions may offer lower interest rates and more flexible terms for members. Federally chartered credit unions cap APRs at 18%, so borrowers with imperfect credit may receive lower rates than they would elsewhere. A history with a credit union might boost your eligibility.

A bank will typically require good credit to qualify for a personal loan. You may also need an account with the bank. Account holders are likely to qualify for the lowest interest rates and bigger loans. You may have to visit a branch and complete the application in person.

How to Apply for a $3,000 Personal Loan

1. Check your credit score. You may find errors on your credit report that you can fix to boost your eligibility for lower-rate loans.

2. Compare the terms and conditions offered by lenders. A personal loan calculator can help you determine what your payments will be.

3. Pre-qualify if you can, because it won’t affect your credit score and will help you with your comparison.

4. Consider using your car or other collateral to get a better rate with a secured loan.

5. Use a co-signee (with good credit) to get a better rate. The co-signee’s credit rating is considered along with your own, but they must agree to pay the loan if you cannot.

6. Gather the documents you need and apply to the best lender. Examples of documents you may be asked to provide are W-2s, paystubs, and financial statements.

$5,000 Personal Loan

Here’s an example of typical loan terms for a $5,000 personal loan. Rates are accurate at the time of writing for a loan through SoFi for someone earning around $50,000 with good credit.

• The monthly payment on a two-year loan with an interest rate of 6.99% would be around $224.

• The monthly payment on a three-year loan with an interest rate of 7.66% would be around $156.

• The monthly payment on a six-year loan with an interest rate of 11.38% would be around $96.

$10,000 Personal Loan

The monthly payment on a personal loan of $10,000 at a 5.5% interest rate over a one-year term would be $858, with $300 in total interest paid over the life of the loan.

The Takeaway

A personal loan is a way to get flexible financing quickly. These loans can be used for any purpose, and the term of the loan can range from 12 months to 10 years. Banks, credit unions, and online lenders offer these loans at varying interest rates.

Personal loans are popular for people who want to consolidate their debt or pay off credit cards that charge a higher interest rate. The requirements for a loan depend on the lender, but a good credit score will give you a better rate. Alternatives to a personal loan are a HELOC, or a credit card balance transfer as long as the card charges a lower interest rate.

SoFi’s personal loans can help you consolidate credit card debt. The fixed interest rate is significantly lower than that on most credit cards.

Looking for a personal loan? With SoFi’s Personal Loans, there are no fees required and no collateral required. Check out

SoFi’s Personal Loans — get your rate in just 1 minute!

FAQ

What credit score is needed for a $3,000 personal loan?

According to FICO, someone with a score of 580 or below is considered a credit risk. A score of between 610 and 640 is typically required for an unsecured personal loan.

Is it possible to get a $3,000 loan with bad credit?

Some lenders, particularly online lenders, will extend personal loans to people with bad credit. However, the terms may include high interest rates. Many online lenders specifically target borrowers with bad credit.

What’s the monthly payment on a $3,000 personal loan?

The monthly payment on a $3,000 loan will depend on the lender, the loan term, and the interest rate. For example, the monthly payment on a two-year loan with an interest rate of 6.99% would be around $224.The monthly payment on a six-year loan with an interest rate of 11.38% would be around $96.

Photo credit: iStock/nortonrsx

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

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